Wow... I really appreciate this excellent reply. Thank you, truly. I talked to a financial adviser last night and he highly recommended avoiding default. The condo is in my wife's name, but I found out her parents co-signed for it, so I cannot ethically default on the house and ruin her parents credit along with my wife's. I have no trouble with the payments, so I am trying to encourage myself that this condo is something I just have to deal with. Thanks for the advice on the savings account... Any idea how much an emergency fund should be? Maybe Dave Ramsey's book will have this info. Thankfully, the student loans have very low interest rates.

I have read there are a few different government refinancing programs for upside down mortgages depending on who gave the loan, so it is something to look into. At least housing prices are on their way back up, so there is hope that someday it will not be upside down.

Many people recommend 6 months worth of basic expenses for the emergency fund. Personally, I am OK with just 2-3 months because that is long enough for unemployment insurance to kick in. Check out the link on the sidebar: Why to Keep an Emergency Fund.

You're broke or in debt ... an emergency fund of one month's minimum expenses might be a reasonable target.